Of course, everybody knew that Michael was the head of a crime organisation (well, everyone except Kay). But they couldn't prove it. That's why they needed Pentangeli's testimony. The fact that Rocco who is known as a killer appears at the hearing, might be interpreted as a provocation. As Geary put it: "Certainly we have to play little games."
I think Kay had a pretty good idea about Michael's "occupation."
"Io sono stanco, sono imbigliato, and I wan't everyone here to know, there ain't gonna be no trouble from me..Don Corleone..Cicc' a port!"
